Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) -- Want to receive this post in your inbox every morning? Sign up here
The Trump administration considers clamping down on Chinese investments in the U.S., North Korea and the U.S. may be ready to talk, and China prepares to make its most decisive shift yet away from the reforms of the 1980s. Here are some of the things people in markets are talking about.
Tariff Tit for Tat
The Trump administration is considering clamping down on Chinese investments in the U.S. and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property, according to people familiar with the matter. The move would escalate tensions already running hot over U.S. President Donald Trump’s plan to impose stiff tariffs on steel and aluminum, to which he reiterated his commitment Tuesday, saying the U.S. has suffered from poor trading conditions with other nations. Gary Cohn is resigning as Trump’s top economic adviser and Republican lawmakers are pressuring the President to at least limit the reach of the tariffs. For their part, Treasury Secretary Steven Mnuchin and Republican congressional leaders tried to tamp down fears of a global trade war. “We are not looking to get into trade wars,” Mnuchin said, adding that he is “supportive” of imposing the duties. The European Union has increased the pressure by preparing punitive tariffs on U.S. goods produced in key Republican constituencies, including motorcycles, jeans and bourbon whisky.
Korean Breakthrough?
Trump signaled he’s open to talks with North Korea, after Kim Jong Un said he was willing to consider giving up his nuclear weapons in return for a guarantee that his regime is safe in a meeting with envoys from Seoul. In a potential breakthrough, the North Korean leader said he was ready to hold talks with the U.S. to normalize relations, the South Korean government said. “They seem to be acting positively,” Trump told reporters Tuesday. “I’d like to be optimistic.” Meanwhile, Director of National Intelligence Dan Coats said he was “quite skeptical.” South Korean President Moon is due to meet with Kim in April, and a delegation from Seoul plans to visit Washington soon to brief the U.S. administration.
Power to the Party
Chinese President Xi Jinping is preparing to give the Communist Party greater control over everything from financial services to manufacturing to entertainment in the world’s second-largest economy, two people familiar with the matter said. The moves would further centralize power, representing the culmination of Xi’s five-year push to reassert party control and China’s most decisive shift yet away from the reforms of the 1980s led by Deng Xiaoping. The gathering that began Monday in Beijing continues today; Finance Minister Xiao Jie and Agriculture Minister Han Changfu are among those holding briefings.
Equities Looking Up
Asian equity futures are pointing higher after U.S. stocks rose and Treasuries reversed gains. The dollar declined on news of Gary Cohn’s resignation, while risk-on sentiment was given impetus by news from the Korean Peninsula and Bank of Japan Governor Haruhiko Kuroda’s appearing to dial back some of his recent perceived hawkishness. Meanwhile, emerging-market stocks rose after five days of declines, copper surged past $7,000 a ton for the first time in a week and silver was among the biggest gainers amid the opposition to tariffs.
Coming Up…
Australia’s fourth-quarter GDP and Malaysia’s interest-rate decision highlight a busy Asia session, data-wise. The Bank of Canada gathers later Wednesday, while the European Central Bank meets on Thursday, with the specter of a global trade war, Italy’s anti-establishment surge and signs of weakened economic activity in the Eurozone all giving weight to President Mario Draghi’s argument for continuing to provide stimulus. The Bank of Japan meets on Friday, and while economists surveyed by Bloomberg generally agree the day when it will start winding back its monetary stimulus program is getting closer, none forecast a change this week.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China’s economy is set to overtake the Eurozone this year.
- Initial coin offerings may need to follow bank secrecy rules.
- India’s little shops are a massive banking network in the making.
- Martin Shkreli deserves at least 15 years in prison for fraud, prosecutors argue.
- Here’s who’s winning from the plunge in the Philippine peso.
- An ex-personal assistant stands accused of stealing $1.2 million worth of rare wine from his boss.
- Art fairs are everywhere. Do they make any money?
--With assistance from Kanga Kong Saleha Mohsin Jennifer Jacobs James Mayger Masahiro Hidaka and Randall Jensen
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.
©2018 Bloomberg L.P.